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on Labor Markets - Supply, Demand, and Wages |
| By: | García-Suaza, Andrés; Sarango Iturralde, Alexander; Caiza-Guamán, Pamela; Gil Díaz, Mateo; Acosta Castillo, Dana |
| Abstract: | The rapid advancements in the domain of artificial intelligence (AI) have exerted a considerable influence on the labor market, thereby engendering alterations in the demand for specific skills and the structure of employment. This study aims to evaluate the extent of exposure to AI within the Colombian labor market and its relation with workforce characteristics and available job openings. To this end, we built a specific AI exposure index or Colombia based on skill demand in job posts. Our findings indicate that 33.8% of workers are highly exposed to AI, with variations observed depending on the measurement method employed. Furthermore, it is revealed a positive and significant correlation between AI exposure and wages, i.e., highly exposed to AI earn a wage premium of 21.8%. On the demand side, only 2.5% of job openings explicitly mention AI-related skills. These findings imply that international indices may underestimate the wage premium associated with AI exposure in Colombia and underscore the potential unequal effects on wages distribution among different demographic groups. |
| Keywords: | Artificial intelligence, labor market, job posts, occupations, skills, Colombia |
| JEL: | E24 J23 J24 O33 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:rie:riecdt:113 |
| By: | Wei Jiang; Junyoung Park; Rachel (Jiqiu) Xiao; Shen Zhang |
| Abstract: | This study investigates how occupational AI exposure impacts employment at the intensive margin, i.e., the length of workdays and the allocation of time between work and leisure. Drawing on individual-level time diary data from 2004–2023, we find that higher AI exposure—whether stemming from the ChatGPT shock or broader AI evolution—is associated with longer work hours and reduced leisure time, primarily due to AI complementing human labor rather than replacing it. This effect is particularly pronounced in contexts where AI significantly enhances marginal productivity and monitoring efficiency. It is further amplified in competitive labor and product markets, where workers have limited bargaining power to retain the benefits of productivity gains, which are often captured by consumers or firms instead. The findings question the expectation that technological advancements alleviate human labor burdens, revealing instead a paradox where such progresses compromise work-life balance. |
| JEL: | G3 J2 O3 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33536 |
| By: | Remy Levin (University of Connecticut); Daniela Vidart (University of Connecticut) |
| Abstract: | Male labor force participation (MLFP) has declined sharply over the past 50 years in the United States. We show that a key driver of this decline is changes in mens’ beliefs about the returns to work, shaped by their lifetime experiences of aggregate male wages. Using PSID data tracking individual labor histories linked to state-level real male wage time series, we find that prime-age MLFP increases with the average male wage in a man’s state of birth over his lifetime, even after controlling for current labor market conditions and a host of fixed effects and covariates. A one standard deviation increase in the average experienced aggregate lifetime hourly wage—corresponding to $0.33 and comparable to the difference in 2000 between being born in 1970 in Louisiana and Texas—raises the probability of labor force participation by 10 percentage points. These effects persist for men who migrate and are stronger when restricting to samerace wages. Our findings suggest that lifetime wage experiences shape long-term beliefs about work, generating lasting spillovers from labor demand to labor supply. |
| Keywords: | Male labor force participation, experience effects |
| JEL: | E24 J22 J24 D83 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:uct:uconnp:2025-02 |
| By: | Chris M. Herbst; Erdal Tekin |
| Abstract: | The composition and quality of the child care workforce may be uniquely sensitive to changes in the complementarities between home production and market work. This paper examines whether the expansion of oral contraceptives and abortion access throughout the 1960's and 1970's influenced the composition, quality, and wages of the child care workforce. Leveraging state-by-birth cohort variation in access to these reproductive technologies, we find that they significantly altered the educational profile of child care workers---increasing the proportion of less-educated women in the sector while reducing the share of highly-educated workers. This shift led to a decline in average education levels and wages within the child care workforce. Furthermore, access to the pill and abortion influenced child care employment differently across settings, with center-based providers losing more high-skilled workers to alternatives with better career opportunities, and home-based and private household providers absorbing more low-skilled women, for whom child care may have remained a viable employment destination. Overall, our findings indicate that increased reproductive autonomy, while expanding women's access to higher-skilled and -paying professions, also resulted in a redistribution of skilled labor away from child care, which may have implications for service quality, child development, and parental employment. |
| JEL: | I21 I38 J13 J22 J24 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33521 |
| By: | Joshua D. Gottlieb; Neale Mahoney; Kevin Rinz; Victoria Udalova |
| Abstract: | Healthcare employment has grown more than twice as fast as the labor force since 1980, overtaking retail trade to become the largest industry by employment in 2009. We document key facts about the rise of healthcare jobs. Earnings for healthcare workers have risen nearly twice as fast as those in other industries, with relatively large increases in the middle and upper-middle parts of the earnings distribution. Healthcare workers have remained predominantly female, with increases in the share of female doctors offsetting increases in the shares of male nurses and aides. Despite a few high-profile examples to the contrary, regions experiencing manufacturing job losses have not systematically reinvented themselves by pivoting from ``manufacturing to meds.'' |
| JEL: | I11 J21 J31 J44 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33583 |
| By: | Kanta Ogawa |
| Abstract: | Older male workers exhibit diverse retirement behaviors across occupations and respond differently to policy changes, influenced significantly by the part-time penalty, wage reduction faced by part-time workers compared to their full-time counterparts. Many older individuals reduce their working hours, and in occupations with high part-time penalties, they tend to retire earlier, as observed in data from Japan and the United States. This study develops a general equilibrium model that incorporates occupational choices, endogenous labor supply, highlighting that the impact on the retirement decision is amplified by the presence of assets and pensions. I find that cutting employees' pension benefits reduce aggregate labor supply in occupations with high part-time penalties in Japan, reducing overall welfare across the economy. In contrast, increasing income tax credits and exempting pension form income tax boost labor supply across all occupations and enhance welfare by raising disposable wages relative to the reservation wage. Reducing part-time penalties in high-penalty occupations also stimulate the labor supply in high-penalty occupations and improve long-term welfare. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.17917 |
| By: | Valerie Smeets; Lin Tian; Sharon Traiberman |
| Abstract: | We argue that college students’ field-of-study choices significantly influence how economies respond to labor market disruptions. To do so, we develop and estimate a framework featuring forward-looking students who choose a field of study when entering college, and subsequently make decisions over occupations after graduating and entering the labor market. Different fields endow workers with distinct comparative advantages and varying costs associated with switching occupations. Simulating both a trade war and wide scale adoption of AI, we use our model to make three points. First, relative to models that ignore how new cohorts adjust their field-of-study choices, our framework predicts larger aggregate income responses and greater distributional differences. Second, policies that enhance flexibility in field-of-study decisions—such as relaxing capacity constraints in high-demand programs—raise aggregate output. Finally, these policies also lessen the adverse distributional consequences of shocks, by affording more opportunities to students with lower earnings potential. |
| JEL: | F16 I26 J24 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33728 |
| By: | Naomi Hausman; Oren Rigbi; Sarit Weisburd |
| Abstract: | Student use of Artificial Intelligence (AI) in higher education is reshaping learning and redefining the skills of future workers. Using student-course data from a top Israeli university, we examine the impact of generative AI tools on academic performance. Comparisons across more and less AI-compatible courses before and after ChatGPT’s introduction show that AI availability raises grades, especially for lower-performing students, and compresses the grade distribution, eroding the signal value of grades for employers. Evidence suggests gains in AI-specific human capital but possible losses in traditional human capital, highlighting benefits and costs AI may impose on future workforce productivity. |
| Keywords: | generative AI, student achievement, worker productivity, higher education, human capital. |
| JEL: | I23 J24 O33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11843 |
| By: | Yang Liang; Joseph J. Sabia; Dhaval M. Dave |
| Abstract: | Leveraging county-level variation in exposure to industry-specific foreign-based robotics shocks, this study is the first to explore the relationship between U.S. robotics expansions and crime. Instrumental variables estimates show that a 10 percent increase in robotics exposure led to a 0.2 to 0.3 percent increase in property crime arrests. In contrast, we find little evidence of a relationship between robotics expansions and violent crime. Our estimates are consistent with robotics-induced declines in employment and earnings among low-skilled manufacturing workers. A back-of-the-envelope calculation suggests that during the period over which robotics exposure induced adverse employment effects, such exposure generated approximately $322 million (2024$) in additional crime costs nationally. |
| JEL: | D24 J20 K42 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33603 |
| By: | Carlsson, Magnus (Department of Economics and Statistics, Linnaeus University); Eriksson, Stefan (Department of Economics, Uppsala University); Rooth, Dan-Olof (Swedish Institute for Social Research) |
| Abstract: | Labor markets in advanced economies have undergone substantial change due to globalization, technological improvements, and organizational changes, making language proficiency increasingly important even in less skilled jobs. Has this development led employers to shy away from hiring immigrants with limited host-country language skills? We shed light on this question by conducting a large-scale field experiment, where we introduce common second-language features in immigrants’ resumes. We also conduct employer surveys to interpret our experimental results. Our main finding is that language proficiency has a strong positive effect on being invited to a job interview, even in typical immigrant entry jobs. |
| Keywords: | language proficiency; immigrant hiring; field experiment |
| JEL: | F22 J15 J24 |
| Date: | 2025–05–06 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:sofile:2025_007 |
| By: | Jesús Fernández-Villaverde; Yang Yu; Francesco Zanetti |
| Abstract: | Defensive hiring of researchers by incumbent firms with monopsony power reduces creative destruction. This mechanism helps explain the simultaneous rise in R&D spending and decline in TFP growth in the US economy over recent decades. We develop a simple model highlighting the critical role of the inelastic supply of research labor in enabling this effect. Empirical evidence confirms that the research labor supply in the US is indeed inelastic and supports other model predictions: incumbent R&D spending is negatively correlated with creative destruction and sectoral TFP growth while extending incumbents' lifespan. All these effects are amplified when ideas are harder to find. An extended version of the model quantifies these mechanisms' implications for productivity, innovation, and policy. |
| JEL: | E22 L11 O31 O33 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33588 |
| By: | Laura Brunner; Maddalena Davoli; Uschi Backes-Gellner |
| Abstract: | Financial literacy has become increasingly important. While previous literature shows that formal schooling enhances financial literacy-likely through analytical learning-little is known about whether and how vocational education, with its focus on practical applications of financial and economic tasks, also contributes to it. We examine whether financial literacy differs across clusters of vocational occupations and what factors might explain such differences. Our results show multiple pathways to acquiring financial literacy: through analytical learning, as in schooling contexts, and through repeated practical applications of financial and economic concepts in everyday occupational tasks, emphasizing the role of vocational education in fostering financial literacy. |
| Keywords: | Financial Literacy, Vocational Education and Training, Human Capital Formation, Skill Acquisition, Occupational Heterogeneity |
| JEL: | J24 I21 D91 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iso:educat:0240 |
| By: | Joseph Altonji; Zhengren Zhu |
| Abstract: | We estimate causal effects of 121 graduate degrees on log earnings. The returns average 0.159 but vary widely across fields, with a standard deviation of 0.176. Experience profiles of the returns also vary and are particularly steep for medicine. Internal rates of return, which account for program length, tuition, and in-school earnings, are sizable but vary less across fields. Earnings effects are higher for women, lower for part time students, and depend on undergraduate major. Students from lower-paying undergraduate majors benefit more from an MBA or JD. School specific returns are higher for higher ranked JD and MBA programs. |
| JEL: | D31 I23 I26 J31 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33530 |
| By: | Fernanda Marquez-Padilla; Susan W. Parker; Tom S. Vogl |
| Abstract: | Mexico’s pioneering conditional cash transfer program Progresa, later renamed Prospera, operated over two decades in a shifting policy landscape. We exploit the program's sudden and unexpected rollback to estimate whether, two decades after rollout studies documented its initial impacts on schooling and labor, the program still raised enrollment and reduced work in youth. Comparing areas with high and low program penetration before and after rollback, we find that rollback immediately reduced school enrollment, especially in boys of high school age. Effects on enrollment were larger at rollback than they were at rollout, albeit shifted from middle school ages to high school ages. Rising work mirrored falling enrollment in boys of high school age. Our results suggest the program had successfully adapted to the rise of high school, but Mexico's poor were unable to protect their children from its unexpected demise. |
| JEL: | I25 J22 O15 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33527 |
| By: | Nuarpear Lekfuangfu; Nuttapol Lertmethaphat |
| Abstract: | The Beveridge curve, which reflects the relation between unemployment and job vacancies is an important policy-relevant tool for better insights into labour markets. The absence of consistent and reliable data in Thailand, particularly on job postings is a substantial downside. This paper presents a showcase of how the Beveridge curve can be constructed for Thailand by exploiting two, related data sources: (i) the administrative data from the government-run job centre services and (ii) user-generated data from online job portals. We propose a procedure on how vacancy and jobseeker rates can be computed from each database, which may have non-representative coverage of users/stakeholders in the labour market. In effect, we also discuss the extent of the population representation of each database and confirms that each data reflects different segments of Thailand’s labour market. Finally, we demonstrate how the Beveridge curve can be plotted as well as re-introduce the measurement of labour market tightness for Thai’s labour market. |
| Keywords: | Labour market; Beveridge curve; Labour Market Tightness; Vacancies; Jobseeker; Online job platform; Thailand |
| JEL: | J2 J3 E24 N35 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:pui:dpaper:232 |
| By: | Jacob Greenspon; Gordon H. Hanson |
| Abstract: | How does improving access to the supply of energy affect regional specialization in manufacturing? We evaluate the long-run employment impacts of pipelines constructed by the U.S. government during World War II to transport oil and gas from the oil fields of the Southwest to wartime industrial producers in the Northeast. The pipelines were built rapidly to connect end points along a direct path that minimized use of scarce construction materials. Postwar they were converted to supply en route customers, giving counties close to the pipelines access to a cheap and plentiful source of energy. Between 1940 and 1950, counties with better access to pipeline gas had larger increases in their share of employment in energy-intensive industries. These impacts persisted to the mid-1980s for all energy-intensive industries and to the late 1990s for the subset of industries intensive in the direct use of electricity, despite the disruptive effects of the 1970s energy crisis. Our findings are relevant for understanding energy-related path dependence in local economic development patterns and how government intervention in energy markets affects industry location in the short and long run. |
| JEL: | F15 J23 N7 R12 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33721 |
| By: | Yuko MORI; Hiroko OKUDAIRA |
| Abstract: | The margin of adjustment in work hours has received relatively less attention in the minimum wage literature, despite its potentially significant implications for distributional consequences. By applying the frequency distribution approach to a quasi-exogenous policy event in Japan, we find that a minimum wage increase reduced long working-hour jobs while increasing short working-hour jobs disproportionately among women. While the minimum wage had a positive compression effect on the wage distribution for women, its impact on their income inequality was much smaller. This reduced effect was driven by substantial reductions in work hours among women with annual incomes near institutional thresholds set by tax and social benefit provisions. The minimum wage, together with these income-based cutoffs, led women in Japan to work shorter hours. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25042 |
| By: | Mark Robinson; Pedro Silos; Diego Vilán |
| Abstract: | We show that the secular decline in real interest rates in the United States, which began in the early 1980s and persisted for nearly four decades, reduced the labor’s share of output and the unemployment rate, and increased earnings inequality. We establish this link using a model of frictional labor markets, estimated from household-level data, in which unemployment risk is only partially insurable. Rising debt resulting from lower interest rates reduces the value of unemployment, leading to lower equilibrium wages relative to productivity and a lower unemployment rate. Wage dispersion also rises. The model is consistent with panel-data reduced-form evidence linking unemployment duration, assets, debt, and post-unemployment wages. In the model, a decline in the real interest rate of the magnitude observed in the data generates a decline in the labor’s share of 6 percentage points and in the unemployment rate of 0.3 percentage points. The variance of log earnings rises from 0.66 to 0.75. |
| Keywords: | Labor share; Household indebtedness; Reservation wage |
| JEL: | J30 E24 E27 |
| Date: | 2025–04–09 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-28 |
| By: | Kirill Borusyak; Peter Hull |
| Abstract: | When estimating the effects of treatments defined by complex formulas, researchers often use simple functions of exogenous shocks as instruments. A leading example is “simulated instruments” for public policy eligibility, which capture variation in state-level policy generosity. We show how more powerful instruments can be constructed by incorporating heterogeneous shock exposure while using a recentering procedure to avoid bias. We characterize the asymptotically efficient instruments in this class and propose an algorithm for constructing feasible approximations to them. Compared to a simulated instrument approach, our approach yields a 44% smaller standard error on the private insurance crowd-out effect of Medicaid enrollment from the 2014 Affordable Care Act expansions. |
| JEL: | C14 C26 I18 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33594 |
| By: | Francisco Javier Arias Vazquez; Daniel Lederman |
| Abstract: | This paper estimates the magnitude of labor market scarring in a developing economy, a setting that has been understudied by the labor scarring literature dominated by advanced economies. The paper assesses the contributions of “stigma” versus “lost human capital, ” which cause earnings losses among displaced workers relative to non-displaced workers. The findings indicate that job separations caused by plant closings result in sizable and long-lasting reductions in earnings, with an average decline of 7.5 percent in hourly wages over a nine-year period. The estimate for one year after a plant closing is larger, at a decline of 10.8 percent. In a common sample, after controlling for unobserved, time-invariant individual characteristics, the impact of a plant closing declines from 11.9 to 8.2 percent. These results imply that stigma in the labor market due to imperfect information about workers (captured by unobservable worker characteristics) accounts for 30.8 percent of the average earnings losses, whereas lost employer-specific human capital explains the remaining 69.2 percent. The paper explores the effects of job separations due to plant closings on other labor market outcomes, including hours worked and informality, and provides estimates across genders and levels of education. |
| Date: | 2025–05–07 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11116 |
| By: | Sheila Jiang; Alessandro Rebucci; Gang Zhang |
| Abstract: | We develop and estimate a new model of endogenous growth in bank efficiency and firm productivity in which banks adopt technology embedded in capital goods produced by entrepreneurs, and agents choose whether to become workers or capital-good-producing entrepreneurs. In this framework, bank efficiency influences firm productivity by affecting agents' occupational choices, while firm productivity affects bank efficiency through the relative price of capital goods. We find that increasing technology adoption in the banking system to the level in the top half of the distribution in the data accelerates the economy's long-term growth from 2% to 2.17%. We also find that empirical evidence based on U.S. bank, metropolitan, and state-level data is consistent with the critical mechanisms of our model. |
| JEL: | G21 O3 O4 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33551 |
| By: | Tiago Cavalcanti; Pedro Molina Ogeda; Emanuel Ornelas |
| Abstract: | We examine the indirect effects of the US-China trade war on Brazil’s labor market. Using industry-specific tariff changes and the sectoral employment distribution across local labor markets, we construct a measure of regional exposure to the trade conflict. Following higher exports to China, our findings reveal that regions more exposed to Chinese retaliatory tariffs on US exports experienced a relative increase in formal employment and wage bills. In contrast, American tariffs on Chinese exports had no significant impact on Brazilian labor markets. These results contribute to a better understanding of the intricate worldwide implications of bilateral trade wars. |
| Keywords: | trade war, trade diversion, local labor markets, Brazil. |
| JEL: | D31 F14 F16 F66 J23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11839 |
| By: | Guido Neidhofer (ZEW Mannheim); Luis Laguinge (CEDLAS); Leonardo Gasparini (CEDLAS) |
| Abstract: | Conditional Cash Transfers (CCTs) have become a key antipoverty policy in Latin America inthe last 25 years. The ultimate goal of this kind of programs is to break the intergenerationaltransmission of poverty through the promotion of human capital accumulation of children invulnerable households. In this paper, we explore this issue by estimating the long-run effectsof the largest CCT in Latin America: the Brazilian Bolsa Familia. Through a combinationof the two-stage-two-sample method and a difference-in-differences approach, we find evidenceconsistent with a positive long-run impact of Bolsa Familia among former beneficiaries. Inparticular, we find a significant positive effect on education and labor income, and a negativeeffect on the likelihood of being a current beneficiary of this social transfer. |
| Keywords: | Conditional cash transfers, long term effects, human capital formation, Bolsa Familia, Brazil, Latin America. |
| JEL: | D04 I38 J24 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2025-684 |
| By: | Rebecca Diamond; Juan Carlos Suárez Serrato |
| Abstract: | This chapter examines the role of spatial sorting in shaping economic inequality in the United States. We first document the evolution of firm and worker sorting by skill level between 1980 and 2017. We highlight a shift since 2000, where both high-education workers and firms increasingly sort away from high-wage, high-rent areas. Throughout the entire time period, high-education workers continue to sort to high amenity areas. We then develop a spatial equilibrium model that incorporates idiosyncratic worker and firm sorting and discuss estimation techniques to identify model parameters. We review recent empirical advancements in spatial sorting, including firm and worker location choices and their interactions with housing policy. We conclude by outlining the model’s limitations and proposing directions for future research. |
| JEL: | J2 R1 R2 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33609 |